Drinks giant Diageo is urging the governor of Illinois to veto a proposal that calls for a 90% tax increase on spirits and wine and a 25% increase on beer.

The beverage company, which has over 400 Illinois-based employees, said today (13 July) that a new study found Illinois has "grossly underestimated" the revenue a new tax on video gaming will bring into the state.

Diageo is calling for governor Quinn to strike the alcohol tax increase from the budget, saving an estimated 4,500 hospitality industry jobs in Illinois.

"Governor Quinn has an opportunity to protect the jobs of hardworking citizens of Illinois by using his veto power to remove this unfair and damaging tax hike from the bill that is currently on his desk," said Joshua Sanders, senior director of state government relations for Diageo. "The hospitality industry in Illinois has already suffered enough during this recession and an increase on the alcohol tax would be another major strike against the local businesses that are the backbone of Illinois's economy."

A study, conducted by Arduin, Laffer & Moore Econometrics, found that based on the experiences of other states that have legalized video gaming, the Illinois State Legislature's US$375m revenue estimate is "far too conservative".

ALME estimated that the average revenue experience from other states could justify revenues of at least $540m - or, a $165m tax revenue windfall for the state of Illinois. The report found revenue forecasts could be as high as $1.7bn, more than ten times the $114m in revenues the state anticipates it will receive from the proposed alcohol taxes.

Sanders added: "It's clear that Governor Quinn has another means by which he can help raise revenue for the state and address its budget issues. We hope that he will do the right thing and work to create jobs, not cut them."